As smaller players enter the IoT market they will naturally look for ways to differentiate by developing specific capabilities. Accordingly, the mass market phase of IoT adoption will be characterized by a more differentiated, ‘horizontal first’ approach by many providers of IoT services.

Liquidity

IoT Service Marketplaces (ISMs) are the entities that will provide the ‘liquidity’ required to make such a market function. ISMs will allow niche providers to easily ‘plug-in’ to larger and less differentiated service providers (and vice versa). They will also simplify the technical, commercial and legal negotiations required before large companies can integrate platforms and other data services.

"Products will win over services in a fast-growing, highly competitive and fluid environment like the IoT."

Ultimately, products are better than services in the IoT space, and the market will be strengthened when participants play to their strengths. The range of service providers that might benefit from the existence of ISMs include cloud service providers, analytics providers, systems integrators, application creators, hardware companies and data brokers.

A similar kind of functionality has long been a feature of the M2M marketplace, with service providers, systems integrators and platform providers often establishing their own ‘bench’ of technology and application partners, each contributing specific, differentiated capabilities.

A new model

The fundamental change in today’s IoT marketplace is the emergence of pure-play ISMs. For example, some organizations are realizing an ISM model with their data service exchange in which they have integrated third party applications and negotiated commercial terms with application providers. A second category of leading platforms has also embraced the concepts associated with ISMs by providing a set of mostly internally developed data services.

As we have often opined, products will win over services in a fast-growing, highly competitive and fluid environment like the IoT.  Effective ISMs can assist the rapid build and scaling of IoT applications by offering a relatively simple route to access the integrated marketplace and choose from its wide range of productized, value-added data services.